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Operator
Conference Operator
Good day, and welcome to the Crown Castle fourth quarter 2023 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Chris Henson, Vice President of Corporate Finance and Treasurer. Please go ahead.
Chris Henson
Vice President of Corporate Finance and Treasurer
Thanks, Scott, and good morning, everyone. Thank you for joining us today as we discuss our fourth quarter 2023 results. With me on the call this morning are Tony Malone, Crown Castle's interim chief executive officer, and Dan Schlinger, Crown Castle's chief financial officer. To aid the discussion, we have posted supplemental materials in the investor section of our website at crowncastle.com that will be referenced throughout the call this morning. This conference call will contain forward-looking statements which are subject to certain risks, uncertainties, and assumptions, and actual results may vary materially from those expected. Information about potential factors which could affect our results is available in the press release and the risk factor sections of the company's SEC filings. Our statements are made as of today, January 25, 2024, and we assume no obligation to update any forward-looking statements. In addition, today's call includes discussions of certain non-GAAP financial measures. Tables reconciling these non-GAAP financial measures are available in the supplemental information package in the investor section of the company's website at crowncastle.com. With that, let me turn the call over to Tony.
Tony Malone
Interim Chief Executive Officer
Thanks, Chris, and good morning, everyone. Thank you for joining us. Before I begin, I'd like to take a moment to thank Jay Brown for his 25 years of service to Crown Castle, including the past seven as CEO. We are grateful for his many contributions over those years and wish him well in his retirement. As we work to identify the next CEO, I am also thankful for the board's confidence in me to lead the company during this interim period. I'm excited to serve in this capacity. I've been associated with Crown Castle for over 25 years, principally as a customer, but also as a joint venture partner in the early days, and most recently as a member of Crown Castle's board of directors. Over that time, I've witnessed the Crown Castle team of dedicated, talented people grow the company into the nation's leading provider of shared communications infrastructure. In my first few weeks in the new role, I have been impressed by the open, candid, and thoughtful discussions I've had with teammates throughout the organization. I am enthusiastic and optimistic about our path forward. In the near term, I will be focused on the following priorities. First and foremost, I am committed to ensuring that our organization continues to execute for our customers, positioning us to meet or exceed our financial and operating goals in 2024. Secondly, I want to facilitate a seamless transition to the company's next CEO. And lastly, I will assist the board in evaluating the alternatives that may come out of our strategic fiber review and help position the company to maximize shareholder value, regardless of the outcome of that review. My confidence in achieving these priorities is bolstered by having a closely aligned leadership team that is focused on delivering strong operational performance. To that end, I'm pleased to announce that Dan Schlinger will continue serving as Crown Castle's Chief Financial Officer. Dan has been a valuable member of our executive leadership team for the past seven years. His expertise, leadership, and institutional knowledge will be vital as we position the company for success in 2024 and beyond. In addition, Mike Cavanaugh, Currently, our chief commercial officer has been appointed chief operating officer for the tower segment. Chris Lavendos will remain in the role of chief operating officer for the fiber segment. The tower, small cell, and fiber solution sales teams currently under Mike will be distributed across these two organizations. I believe this change in leadership structure provides an enhanced focus on generating the highest returns in each business segment and will best enable us to maximize value across our portfolio. We have also recently taken steps to further strengthen our company's board with the addition of three new directors, Jason, Sunit, and Brad. Each bring valuable financial, operational, and industry experience. We look forward to benefiting from their unique insights and expertise as we work to leverage our strong foundation and position Crown Castle for the future. At this point, I'd like to share some of my personal insights into how I see Crown Castle positioned. In my 30-plus years of experience in the wireless industry, I have seen the tower business grow tremendously, particularly during periods of generational upgrades. During my time at Verizon, the shift from 3G to 4G required more tower densification than initially expected and more than initially deployed. The coverage and capacity from the new 4G technology and corresponding new spectrum that it was deployed on was not sufficient to meet the promised performance levels of that technology. This was especially true at cell edge and resulted in further densification over time. I think a similar dynamic is in play with 5G. The remaining densification required to deliver on the promise of 5G performance will drive not only robust tower growth, but also significant demand for small cells. As the largest shared communications infrastructure provider in the U.S., with a unique portfolio of towers, small cells, and fiber, I am excited to see how we can take advantage of these industry trends and deliver value to our shareholders. As a final note, the work of the CEO Search Committee is underway. And the Fiber Review Committee is well into its work as it oversees the board and management's review of strategic and operational alternatives that maximize value across our enterprise. We will provide updates on each as developments warrant. With that, I'll turn the call over to Dan.
Dan Schlinger
Chief Financial Officer
Thanks, Tony, and good morning, everyone. I want to start by saying how glad I am to continue serving as Crown Castle CFO. This is a great company and a great industry, and I look forward to helping deliver on our 2024 plans while positioning the company to grow long-term shareholder value. Moving to 2023 results on page four, we finished the year in line with our expectations. Full-year site rental revenues grew 4%, which included $212 million of core organic growth, excluding the impact of Sprint cancellations. In the year, tower organic growth was 5%, supported by our decision to pursue holistic, long-term agreements with each of our major customers. Tower growth remained resilient despite the industry-wide slowdown in tower activity in the middle of 2023. Additionally, small cell growth was 6%, resulting from 8,000 new nodes in 2023, we completed an additional 2,000 notes in the year that are expected to begin billing in the first quarter of this year. Finally, Fiber Solutions revenue is flat in the year. The slowdown in tower activity in 2023 had the most pronounced impact in our services business, driving a $100 million decrease in our margin year over year. The decline in services contribution, along with increased interest expense from the rise in interest rates in 2023, partially offset our revenue growth, resulting in 2% AFFO growth for the year. Turning now to page five, our full year 2024 outlook remains unchanged. Strong underlying growth across our business continues to be supported by increasing data demand and the network densification required to meet it. We continue to forecast tower activity levels consistent with the back half of 2023, as well as accelerating small cell growth. With 2,000 nodes shifting from 2023 to 2024, we now expect to deliver 16,000 new nodes this year. With respect to fiber solutions, we returned a growth of 3% in the first quarter of 2023 and continue to expect 3% organic growth in 2024. However, as discussed in our call last quarter, the following three items are expected to negatively impact our 2024 results. First, the $170 million of Sprint cancellation payments we received in 2023 will not recur in 2024. Second, we anticipate a combined $250 million reduction in non-cash items, specifically to our straight-line adjustment and amortization of prepaid rent. And lastly, we expect $55 million in lower contribution from services gross margin. Due to these impacts, our 2024 outlook shows year-over-year declines in site rental revenues of $160 million, or 2%, adjusted EBITDA of $250 million, or 6%, and AFFO of $270 million, or 8%. Normalized for the impact of the items I just mentioned, site rental revenues, adjusted EBITDA, and AFFO would show year-over-year growth of 4%, 5%, and 3%, respectively. Turning to page 6, expected organic contribution to full-year 2024 site rental billings remains unchanged. with consolidated organic growth of 2% or 5% excluding the impact from sprint cancellations. The 5% consolidated organic growth consists of 4.5% growth from towers compared to 5% in 2023, 13% growth from small cells as we expect 16,000 new nodes in 2024 compared to 6% growth in 8,000 nodes in 2023, and 3% from fiber solutions compared to flat in 2023. Full year 2023 site rental revenues were $21 million above the 2023 outlook at the midpoint, inclusive of approximately $5 million higher than expected non-recurring tower segment revenue in the fourth quarter. Our 2024 outlook for site rental buildings remains unchanged, and we expect year-over-year core leasing activity to be within the growth ranges in the chart. Moving to page seven, we expect to deliver $65 million of AFFO growth at the midpoint excluding the impact of Sprint cancellations and the non-cash decrease in amortization of prepaid rent. Turning to the balance sheet, in December of 2023, we issued $1.5 billion of long-term fixed-rate debt, allowing us to end the year with approximately $6 billion of unutilized capacity on a revolving credit facility, a weighted average debt maturity profile of eight years, and 92% fixed-rate debt. Lastly, Our 2024 outlook for discretionary capital remains unchanged at $1.5 to $1.6 billion, or $1.1 to $1.2 billion, net of $430 million of prepaid rent received. To wrap up, strong underlying growth across our business continues to be supported by increasing data demand and the network densification required to meet it. The contracted agreements we have in place provide line of sight into continued underlying growth over a multi-year period. We believe this growth provides a stable foundation for our current dividend and supports our 2024 CapEx plan without issuing equity. Our unparalleled domestic portfolio of tower, small cell, and fiber assets provides a growing number of opportunities to create value for our shareholders. With that, Scott, I'd like to open the call to questions.
Operator
Conference Operator
We will now begin the question and answer session. To ask a question, you may press star then one on your touchstone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two.
Operator
Q&A Moderator
At this time, we will pause momentarily to assemble our roster. The first question comes from Simon Flannery with Morgan Stanley.
Operator
Conference Operator
Please go ahead.
Simon Flannery
Morgan Stanley
Thank you very much and good morning. Tony, I appreciate the comments on the densification. It'd be great to get a sense of what you think the shape of that looks like. I think you'd assume that we continue at the levels of the last couple of quarters. Do you think we sort of pick up then over the next two, three, five years as the traffic continues to grow? Or is it going to be a little more lumpy than that? And any comment on the current leasing environment? We did hear, I think, Nokia's CEO earlier this morning talking about expectations of some green shoots in the second half of this year. So If you're kind of having better, more constructive conversations around plans, that would be interesting to know as well. And then, Dan, just one thing for you on the discretionary CapEx. If there was a decision to do something on the fiber side, to what extent is that CapEx committed today versus still being something that could change later on, depending on what the committee comes up with? Thanks.
Tony Malone
Interim Chief Executive Officer
Simon. Thanks for the questions. Appreciate it. Let's start with the shape and trajectory. It's hard to speculate, obviously, on the progress that the carriers might make in terms of densification. A lot depends on their own personal capital allocation decisions. My personal opinion based on history is that it will likely be a fairly non-lumpy approach over time, but it's very hard to speculate exactly how it will play out. In terms of some of the commentary recently, it's too early for us. We have not seen anything that would cause us to change our view of 2024. Thank you.
Dan Schlinger
Chief Financial Officer
And I'll take the CapEx question, Simon. Thanks. Most of what we have on the small cell side of our business is committed because we have customer obligations to build the small cells, those 16,000 that we have coming on air that we're building throughout 2024. But we obviously are going to be looking at, through the strategic review, anything we can to drive the most value possible, including what our CapEx plans are. So we'll have that in mind and, if anything, does change out of that. We'll update anybody. But as of right now, we see the same capital going for 2024 that we expected when we gave guidance in October.
Simon Flannery
Morgan Stanley
And could you just clarify that 2K that sort of slipped into 2024? What was the situation there?
Dan Schlinger
Chief Financial Officer
Sure. I think we discussed that a lot of the small cell node build that we had for 2023 was going to be back-end loaded. It was. And we built some at the very end of the year that we weren't able to start billing until the beginning part of 2024. So we're talking about something crossing over a year, so being a month later than we expected or even less than that. When we get into trying to figure out exactly when a node is going to be completed, it's hard to pick to a day. But we feel like we have made the progress we expected to make during the year in 2023 of delivering for our customers and The fact that the billing didn't happen just kicks it over into 2024. Great.
Operator
Q&A Moderator
Thanks, John. Sure. Our next question comes from Rick Prentice with Raymond James.
Operator
Conference Operator
Please go ahead.
Rick Prentice
Raymond James
Thanks. Good morning, everyone. And, Tony, good to talk to you again.
Tony Malone
Interim Chief Executive Officer
Thanks, Rick.
Rick Prentice
Raymond James
A couple questions. First, Dan, appreciate the call around the 2,000 nodes for Simon. How should we think about what the disconnected nodes were in 23, and then I think there's another disconnected nodes in 24, probably around the middle of the year. Can you kind of help us understand, was that like maybe 2,000 or 3,000 disconnected last year, and maybe 3,000 to 4,000 getting disconnected this year from that sprint and other?
Dan Schlinger
Chief Financial Officer
Yeah, Rick... As we discussed in 2023, a lot of the sprint cancellations happened, and some of those were on small cells. We churned about 5,000 small cells in the year, which is if you look at kind of the number of small cells we have on air, we started at 60,000 at the beginning of the year, took them down to 55,000 during the year with those 5,000 nodes, and now we're up back to 65,000 that are generating revenue for us at this point. I think we had talked about that. There is no more going into 2024 of actual churn, but there is some lopover impact of having churn midpoint in the year that will then have a full year churn impact in 2024, which is what you're seeing. So we don't anticipate any significant or any churn really at all in our small cell business in 2024. Okay.
Rick Prentice
Raymond James
And then I think previously one of the churn slides had anticipated maybe 25 million of small cell churn split between 24 and 25. Is that still the case?
Dan Schlinger
Chief Financial Officer
That is still the case.
Rick Prentice
Raymond James
Okay. And then one more esoteric question. American Tower has started recognizing some capital expenditures for exercising purchase option from carrier transactions. I think in your 10K, you all talk about you maybe have about $9 billion of purchase options that could come due over the next many years. how should we think about how that flow of money comes in? Is it radically equal over those different periods, whether it was an AT&T set of towers or a T-Mobile set of towers, or any thoughts about giving us a table at some point about when that $9 billion worth of value could come in? And I think I did see a note that less than $10 million would come in before $25. Just wanted a little more color on that if I could.
Dan Schlinger
Chief Financial Officer
Sure. To try to give a little bit of color, as we went into some of the transactions where we purchased towers from our carrier customers, some of those were structured as long-term leases where we had a purchase obligation at the end, which is what you're referring to, the $9 billion obligation that we have. Those are not ratable. They really start to kick in in the mid-2030s area. And we will consider your comment there of providing more color or more certainty around when they come in in the future in some sort of table. But we're not close enough right now for that to be an obligation that we need to worry about at this point. Sorry, it's an option at this point. It's not an obligation. We have the option of doing so or not. That's bad language on my part. But we can provide some of that color as we get closer. But we're still a long way away from that being a material number for us. And as you pointed out, less than $10 million, it just isn't something that in the near term has much impact. And as it does and as we get closer, whenever that may be, we can provide more color at that point.
Rick Prentice
Raymond James
Okay.
Operator
Q&A Moderator
Very good. Thanks, everybody. Stay well. The next question comes from Michael Rollins with Citi Investment Research.
Operator
Conference Operator
Please go ahead.
Michael Rollins
Citi Investment Research
Thanks. Good morning. Tony, I'm curious, based on the experience you have over a whole number of years on the network side, as you look at the fiber segment for Crown, how do you see the opportunities for Crown to improve marginal returns on capital and how quickly that could potentially happen within the organization with some of the changes that you're making and maybe some of the opportunities that you've been able to identify while you've been on the board and now serving as the CEO. Thanks.
Tony Malone
Interim Chief Executive Officer
Thank you, Michael. Certainly, as we look at performance in the fiber segment of our business, if I go back to my three priorities, Clearly, improving performance in those segments is part of the strategy in terms of how we achieve our 2024 results and how we position ourselves better for the future. I have benefit from my own experience over 30-plus years, obviously, working with the management team here, but we also have the benefit of the strategic fiber review that's going on right now. So I will be informed from a lot of different directions. And based on that, I'm sure I'll get good insight in terms of the things that we can do. But as you saw from the announcement, there are certain things that I think we need to do right out of the gate. Personally, I like a management structure where accountability is unambiguous. The change in the COO structure, I believe, provides an opportunity to improve the returns we're getting out of the fiber segment, and I expect that to happen in 2024. I think there's other levers that are likely to be pulled that we'll be looking at through the process, things like capital allocation, things like cost structure, et cetera. And in terms of timing, yes, I do believe that we can make those improvements, make improvements in 2024 on the trajectory of our performance and our returns in that segment.
Michael Rollins
Citi Investment Research
Thanks. And then just one other question. I suppose it was a few months ago, there were the press reports about Crown Castle considering selling or monetizing, I should say, part of its land portfolio. And there was some discussion of that on the last earnings call. Has Crown come to a decision about what to do in terms of monetizing land on a go-forward basis as part of capital allocation for the company?
Dan Schlinger
Chief Financial Officer
Yeah. I don't think we commented at the time when those press release rumors came out one way or the other of what we were doing, but I do think that the overall concept remains that One of the things that we want to make sure of is that we are maximizing the value of all of the assets in our portfolio. And if that includes something that we think that we can sell and generate better value for in an external place than we can internally, then we would absolutely look at it. And that would include land under our towers, but only if we believe that the value we could get from an external party would exceed the value that we get as owning that asset. And like I said, that's true of all the assets we own. And if something does come up, we would obviously identify it and talk about it with our investors. But at this point, we don't have anything to talk about.
Operator
Q&A Moderator
Thanks. The next question comes from David Barton with Bank of America.
Operator
Conference Operator
Please go ahead.
David Barton
Bank of America
Hey, guys. Thanks so much for taking the questions, Dan. Not that you went anywhere, but welcome back. Good to have you. I guess... Tony, my first question is, could you talk a little about the order of operations of what's going on? Is the plan to make a plan with respect to fiber and then find the right CEO to fit with the plan? Or is the plan to find a CEO to help create the plan, to own that plan and execute that plan? It would be interesting to hear what is actually the plan and what the timetable is going to be. And then, Dan, when we set 2024 guidance, lots hasn't changed. But what has changed is the rates, environment, attitudes, opinions, consensus views around rates in 2024. And can you kind of elaborate a little bit on how that element of the 2024 outlook didn't change from what we were thinking in the third quarter guide? Thank you.
Tony Malone
Interim Chief Executive Officer
David, thanks for the questions. So both committees, the CEO Search Committee and the Fiber Review Committee's strategic review are underway. I think it's too early to speculate on how it will play out. I have great confidence in the CEO Search Committee and their process of evaluating and determining the best fit for our company. At the same time, I'm sure We'll have information coming out of the strategic review in that process. And so I think the two will naturally come together and provide us clarity in terms of how we move forward. So at this point, it's too early to say a whole lot more about that. But I am very confident that the two committees will be approaching this very thoroughly.
Dan Schlinger
Chief Financial Officer
Yeah, and Dave, on the interest... expense, as you are well aware, market perception of interest rates moves around quite a bit. It moves up, it moves down. There are plenty of things in our guidance where we have ranges in what we think are reasonable expectations of what could happen. Some of those sometimes go better, some of those sometimes go worse, and very rarely do we get it right. So what we do when we're talking about guidance is think about things in an overall perspective. And we believe at this point there isn't enough clarity around what interest rates are going to do. And even in the last, I don't know, two weeks, the perception of what the interest rate cut likelihood is in March has changed dramatically. So we're not comfortable enough with what the interest rate environment looks like over the course of 2024 to make a change at this point. And like I said, it would be some impact at the ASFO level, and there's gonna be positive and negative throughout the course of the year based on what we thought was gonna happen and what actually happened. Only when they start to exceed the ranges that we've given will we really consider changing the guidance at that point.
David Barton
Bank of America
All right, great, helpful, guys. Thank you so much.
Operator
Conference Operator
The next question comes from Brendan Lynch with Barclays. Please go ahead.
Brendan Lynch
Barclays
Great, thanks for taking the question. You guys have guided to 5% organic tower growth through 2027, which is largely already contracted in your MLAs. Can you talk about what level of consistency or volatility we should expect on a quarter-to-quarter basis for core leasing activity?
Dan Schlinger
Chief Financial Officer
Sure. Just to clarify the comment you made, we've given some disclosure that through 2027, we believe our tower growth will average 5%, and 75% of that is contracted to date. And I think you could understand that there's more contracted in the early years than there is in the late years. But we believe that the amount of activity will support our 5% growth going forward. And in terms of volatility on a quarter-to-quarter basis, our business is very stable. But that doesn't mean that every quarter is the same. So we will have volatility quarter-to-quarter. But over the course of the year, I think it is a pretty stable growth pattern. And that has been proven over time. But even in the years, we grew at 5% in 2023. We expect to go to 4.5% in 2024. That level of volatility will likely remain something in that vicinity. But when we're talking about a business of our size and scale, that's not a huge amount of volatility overall. So we feel good about both the stability of our cash flows and the growth of those cash flows over the next several years.
Brendan Lynch
Barclays
Great, thanks. That's helpful. And then on churn, it was the lowest that you've had in at least five years in 2023. Are you expecting it to be structurally lower going forward? Of course, this is excluding Sprint.
Dan Schlinger
Chief Financial Officer
Yeah, we have said that we believe our churn is going to be between 1% and 2% per year. We were on the low end of that, obviously, in 2023, as you pointed out. We There's nothing that would say that we're going to be outside of the 1% to 2% range, but we do think we'll be on the lower end of it in the near term, just given some of the churn historically have been related to consolidation churn that is not occurring anymore other than the sprint consolidation that you just spoke of. And we think that churn in the industry is very low. It's one of the reasons that it makes the tower business such an attractive business is that we have growth driven by the things that Tony was talking about, densification, continuation of data demands. limited capital expenditure requirements and limited churn so we can have long-term growth without having to spend a lot of money, that's a great place to be, and we believe that churn will remain relatively low on the lower side of that range for a bit.
Operator
Q&A Moderator
Great. Thanks for the call. Next question comes from Nick DelDio with Moffitt Nathanson.
Operator
Conference Operator
Please go ahead.
Nick DelDio
Moffitt Nathanson
Hey, good morning, and Dan, glad to hear that you won't be going anywhere. First, there's always been a lot of change and uncertainty in a pretty short period of time. I think about the reduction in force, the leadership and the board changes, the U-turn on the plan to centralize the organization, and obviously what's going on with the Fiber Review. In light of all that, how would you characterize morale and the state of the workforce? And are you confident that there won't be any sort of operating impacts or unwanted loss of human capital stemming from all that?
Tony Malone
Interim Chief Executive Officer
Nick, thanks for the question. Yeah, so in my time here, I've spoken to a great number of employees, and I would say that the morale is good. I mean, obviously change is unsettling for people, but, you know, people, the employees want to just get down to work. They want to serve their customers. They want to drive the business forward. And I think they're excited about moving forward. So I have not experienced in my short time here any evidence to say that people are reacting in a way that I would be concerned about our ability to execute our plan in 2024 and beyond. So I've been happy with everything I've seen so far, and I think the employee morale is very good.
Dan Schlinger
Chief Financial Officer
I'll add a couple things, because I probably have a little bit more context, given my perspective here. First, it's been great to see how Tony has engaged with our employees. He's been talking to a lot of people, and I think the response has been very positive both ways, as Tony just said, from his perspective, but also people have appreciated his coming in with plans and ideas and not just sitting here doing nothing, like, hey, we're going to make this better. And I think people like that. I think people like the direction. And as you pointed out, Nick, there's been a lot of change and a lot of uncertainty, and I think Tony has projected a view of understanding what we need to do and having an idea of how to get there, and I think that has been helpful. And lastly, even in the fourth quarter, we delivered on what we expected to do, and there couldn't have been much more turmoil than in the fourth quarter for us. So I think that's just a testament to how well people stay focused on, as Tony pointed out, delivering for our customers and generating what we need to do for the business. And the overarching commentary that I've received recently has been just let us go back to work. You know, there's been a lot of turmoil. We like what we do. We like working here. We like delivering for our customers. Just let's go do that. And I think that's the overarching feeling that we've gotten from most of our employees and to which I would just say thanks to all of them who are listening. I know it's been a tough time and appreciate all the dedication you've shown to getting things done anyway.
Nick DelDio
Moffitt Nathanson
Okay. That's terrific to hear. If I can ask one more about Fiverr Solutions, your bookings in that segment in Q4 were at a level that would get you to your 2024 guidance if they were sustained over the course of the year. And it was a nice step up from what we've seen over the last year and a half or so. I guess, can you talk a little bit about what's behind the improvement so we can get additional comfort in its sustainability? Sure.
Dan Schlinger
Chief Financial Officer
Sure, I think we tried to address this through 2023 because I think a lot of people were rightfully skeptical that we would return to 3% growth in fourth quarter and as we talked about it. But we gave a couple reasons for that. One was we saw more activity in the first half of the year and we thought that it was going to come through by the fourth quarter and we had year over year comps that were a little easier to meet on the fourth quarter. So what we are seeing is a level of activity based on customers wanting more data to move and more connectivity for all of the general macro trends that are going on in the world right now that you're very well aware. Things like artificial intelligence and moving data to centralized data center locations or the cloud, whatever we want to call it, and just the overall amount of data increasing, data demand increasing from a wired perspective, not just wireless, And we're seeing those trends act in our favor. And because of our focus on larger businesses, government agencies, education, medical, financial services, those types of industries, that demand generally has been a little bit more predictable than we've seen in the other parts of the fiber market, like the small and medium business parts of the fiber market. And what we expected to come true has come true. Those bookings did happen. We did see the growth. And we do see that going into 2024 and all of the industry information and analyst expectations that we've seen would support our view that 3% growth is achievable in 2021. Okay.
Michael Rollins
Citi Investment Research
Got it. Thank you, guys.
Operator
Conference Operator
Thanks, Nick. Next question comes from John Atkin with RBC Markets. Please go ahead.
John Atkin
RBC Markets
Thanks, and welcome back, Dan. So with several new board members involved and obviously the new acting CEO, I just wondered if you could give a little bit of color about the operating metrics you're going to be examining or are examining around small cells and fiber that will inform your strategic review, whether it's same-tenancy growth and the fiber metrics and the small cell metrics may actually be separate. Can you give a little bit more color as to what you'll be looking at as you conduct the review or asking the committee to look at?
Tony Malone
Interim Chief Executive Officer
John, thanks for the question. I would answer that by saying the review will be a very thorough, holistic review that will take into account all aspects of our operations. So to get more specific than that in terms of the nuances, you can be assured it will be a very thorough process. obviously will allow the board and management team to be very informed in terms of what the best path forward would be.
John Atkin
RBC Markets
And I might have missed it, but what's kind of the timeline that you're looking at for conducting that?
Tony Malone
Interim Chief Executive Officer
We have not, I'm not going to speculate on how long the process will take. What I will tell you is we're very, very much into the process now. The board and management has been active in this since the beginning of the year, but I can't give you a timeline on when that will complete.
John Atkin
RBC Markets
And then two more questions. I'm interested in the backlog of small cells and roughly what portion of those incremental nodes are kind of second and third tenants versus requiring capital, maybe a rough split. And then lastly, I think it might be useful to review the history. You've done a lot of acquisitions over the years with NextG and Synesis and Volcon and FPL and Lightower and so forth. And as you look at the totality, the fiber business in particular, how would you characterize the product mix? How much would you consider to be more infrastructure versus managed services? Any kind of views on that I think would be useful to hear. Thanks.
Dan Schlinger
Chief Financial Officer
Let me take the first one of those, John. In the backlog, we have about 50,000 nodes in our backlog, of which about 60% are co-location nodes. So as we've talked about, that number has moved over time where the majority of our nodes had been anchor builds for a long time, and the majority of the nodes in our backlog now are co-location nodes. So we're seeing a progression there, and I think that that does speak to over time a decrease in capital intensity to get to the same amount of growth. On the product mix of our fiber acquisitions or our fiber business around infrastructure versus managed solutions, I think I would go back to what I said earlier, which is what we were really focused on is trying to deliver the right products to a base of larger customers that are generally more sophisticated than the general fiber market. which leads us more towards, in many times, an infrastructure build. But as the market does move and managed services becomes important, we are evaluating our product set to make sure that we remain top of mind with our customers and are delivering exactly what they need. But the vast majority of what we do is aimed at kind of those large-scale enterprises that And they generally do have more sophistication in how they manage their networks internally and require less of the services that have become more in vogue recently in the fiber solutions business.
Operator
Q&A Moderator
Thank you.
Operator
Conference Operator
Our next question comes from the line of Tatia Levy with EBS. Please go ahead.
Tatia Levy
EBS
Great, thank you. A couple questions. Can you talk about how we should think about capital allocation in terms of maximum leverage you would like to take on in the next year or two? And maybe an update on the operational efficiencies and cost control as you continue to take on the strategic review. And I think you had positive relocations. Is there any impact that we should be thinking about from that? And lastly, the pacing of tar releasing activity for 24, the guide is 4.5% for the year. Should we expect that it will be more second half weighted? Thank you.
Dan Schlinger
Chief Financial Officer
Let me take the first one on leverage. Our target leverage is around five times debt to EBITDA. We understand that given the spending of capital over the course of 2024, along with some of the non-cash reductions that are going to reduce our, our non-cash impacts are going to reduce our EBITDA, that our leverage will tick up a bit. But we believe that over time, the growth in our business will allow us to naturally de-lever back to our five times and believe that we are in a good shape to do so. I wouldn't talk about a maximum leverage at this point. I don't think we need to talk about it that way. What we want to do is maintain somewhere close to our five times. And then when we tick above it, like we have recently and we'll continue to do in 2024, have very good line of sight into how we can bring it down with good capital management and good operating performance, which is what we think will happen.
Tony Malone
Interim Chief Executive Officer
Dan, why don't you answer the pacing of the leasing, and then I'll circle back on the operational efficiency question.
Dan Schlinger
Chief Financial Officer
Sure. On the pacing of leasing, it's generally level-loaded through the year. Like we said, we believe the level of activity is in 2024 approximates what we saw in the back half of 2023, and we think that will remain relatively consistent. There is a little bit, as is typical, that is back-end loaded. There's a little bit more in the second half than the first half, typically, when we see the leasing, mostly because our customers act that way. They spend more money in the second half of the year than they do in the first half of the year. But it's not anything that I would speak to would cause a significant change in pacing of leasing activity in 2024.
Tony Malone
Interim Chief Executive Officer
Thanks, Dan. Regarding operational efficiency, the move with CLOs or P&L responsibility obviously is a step that I feel will improve our line of sight on the efficiencies needed in each segment, and I think that in and of itself will allow us to drive efficiencies. In addition to that, there's a The work we did in 2023 in the middle of the year with consolidations, it's important to distinguish that from the consolidation that you're referencing that we reversed. Those are complete. The benefits of those are in the 2023 results and will continue and flow through into our 2024 results as well. So we feel very comfortable with achievement of those efficiency initiatives. When I looked at the consolidation that had been planned for the end of 2023 and early 2024, if you recall, we did not identify specific savings, and quite frankly, those savings were more longer-term in nature. So the guidance we provided for 2024 and the efficiencies that we needed, I feel strongly that those efficiencies can and will be gained irrespective of our decision to cancel the consolidation that was previously announced. So I don't have any concerns in terms of achieving the efficiencies we need with respect to the change in that consolidation plan.
Tatia Levy
EBS
Got it. Thank you very much.
Operator
Conference Operator
The next question comes from Richard Joe with JP Morgan. Please go ahead.
Richard Joe
JP Morgan
Hi. I just wanted to follow up on the backlog for small cells. Is that still being added to, but the overall level should come down given the higher build base that you're having for 2024? And then I would follow up.
Dan Schlinger
Chief Financial Officer
Yeah. The short answer, Richard, is yes. We continue to add to our backlog. It's just in small increments at times, and there's not – because we want to – make those kind of rounded numbers. We won't always announce everything we do, but given the size of the orders that we got from specifically T-Mobile and Verizon, we're working through that backlog with those customers, and that is the majority of the work that we're doing, and that is the majority of the 50,000 node backlog that we have currently. So we do anticipate that as we deliver the 16,000 nodes that we expect to deliver in 2024, that the backlog will come down based on moving them out of backlog and into revenue generating, which is actually, we think, a very good thing.
Richard Joe
JP Morgan
And then given the transition and strategic review period, is there potentially a shift maybe to allocate more capital to in terms of builds or acquisitions, or is that something that you've largely stayed away from and will continue?
Tony Malone
Interim Chief Executive Officer
Yeah, Richard. I think all options are on the table with the strategic review. I don't think... I think it would be premature to conclude that we would do or not do. anything specifically in terms of capital allocation. I think it's all fair game, and, you know, we'll be informed, you know, by the review. We'll be informed by just opportunities in the marketplace.
Operator
Q&A Moderator
Great. Thank you. Okay. Operator, I think we have time for one more question. Go on.
Operator
Conference Operator
Our final question today comes from the line of Eric Lutow with Wells Fargo. Please go ahead.
Eric Lutow
Wells Fargo
Hi. Thanks for taking the questions. I know you said all options were on the table, but just wondering at a higher level with fiber solutions and small cells, is there any possibility you could consider divesting fiber solutions while retaining your small cell business, or are they more or less married together where it's very hard to really split them apart from one another?
Tony Malone
Interim Chief Executive Officer
Eric, thanks. I think it would be pure speculation on my part. I think, as I said, all options are on the table. I would not dismiss any option and would not suggest any option is more likely than another at this point in time.
Eric Lutow
Wells Fargo
Gotcha. And as you look at fiber solutions and small cells, I guess, do you think there are ways you could operate the business more capital efficiently without sacrificing the future growth of the business, or does that just kind of naturally come from your improvement in the mix of co-location nodes versus anchor tenant nodes? Thank you.
Tony Malone
Interim Chief Executive Officer
I think we can improve how we operate the business without impacting the future growth prospects.
Operator
Q&A Moderator
Yes. Okay. Appreciate it. Thank you.
Operator
Conference Operator
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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